Use of Incentives in Performance-Based Logistics Contracting
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Traditional contracting is primarily transactional, rewarding contractors when deliveries are made or certain process milestones are met. Performance-Based Logistic (PBL) contracting seeks to base contractor incentives on ongoing performance measures to achieve reliability and cost savings. Key to the success of these arrangements are the incentives that align the interests of the customer and the vendor. This report describes the incentives used in PBL contracts, identifies best practices, and provides recommendations for effective incentives going forward. The study team interviewed PBL practitioners including defense-unique contractors, defense-commercial contractors, and experts who are knowledgeable in the government perspective in the United States and abroad. The team supplemented these interviews by analyzing a PBL dataset of U.S. Department of Defense contracts. Of the four identified categories of incentives--time-based, financial, scope, and other--interviews found that time-based incentives stood out for their reliable appeal and relative underuse in the United States.
Format:Paperback
Language:English
ISBN:1442280654
ISBN13:9781442280656
Release Date:April 2018
Publisher:Center for Strategic & International Studies
Length:74 Pages
Weight:0.44 lbs.
Dimensions:0.1" x 8.4" x 10.8"
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